CNN BREAKING NEWS

Ken Lay Declines to Testify Before Congress

Aired February 3, 2002 - 17:29 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. FREDRICKA WHITFIELD, CNN ANCHOR: An update on the scheduled Enron hearings on Capitol Hill tomorrow. Let's now go to Jonathan Karl, who is joining us on the telephone from McLean, Virginia -- Jonathan.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Yeah, we have some breaking news here. Congress had been eagerly awaiting Ken Lay's appearance tomorrow before the Senate Commerce Committee, and I had just been told by a senior Democrat on that committee, Byron Dorgan, that Ken Lay has formally notified the committee that he is not going to appear.

He had promised about a month ago to come voluntarily before the committee, and now he has written a letter. I have a copy of that letter, which was sent to the committee chairman, Ernest Hollings of South Carolina. The letter is a two-page letter from Ken Lay's lawyer. It cites a series of what he calls inflammatory statements that show "that judgments have been reached and the tenor of the hearing will be prosecutorial."

He goes on to list a series of statements made on television shows, by key Democrats and Republicans on that Commerce Committee, openly criticizing Ken Lay and also a statement, a quote from the New York Times today saying, "Mr. Lay will face a panel eager to pulverize him."

So let me read you, Fredricka, the last line in this letter which kind of tells you what the thinking is here. "As a consequence, I have instructed Mr. Lay to withdraw his prior acceptance of your invitation." Invitation, that is to appear before the committee.

"He does so, but only with the greatest reluctance and regret. He also wishes to express, as do I, our sincerest apologies for any inconvenience caused by this decision, but he can not be expected to participate in a proceeding in which conclusions have been reached before Mr. Lay has been given an opportunity to be heard."

So this is the decision from Ken Lay. This is creating quite a stir. This was easily the most eagerly anticipated hearing of the year up on Capitol Hill, Ken Lay's first appearance before Congress, to talk about the collapse of Enron.

And Byron Dorgan, the senator who I spoke to earlier about this said that he thinks it's a terrible mistake for Lay, because he's been promising for a month that he would participate, and then here literally on the, almost 11th hour before he's supposed to go up, Ken Lay is pulling the plug and not appearing.

WHITFIELD: Are any of the insiders there in the Washington area also saying that now hearing this from Ken Lay, this might be an indication that there just might be similar pattern of behavior to follow suit from some of the other executives of Enron who are expected to begin testifying this week?

KARL: Well, there is already some of that going on. Andy Fastow, who is somebody who was most heavily criticized, an Enron executive most heavily criticized in that Powers Report commissioned by the Enron board, has already told the House Banking Committee that he will take the Fifth Amendment when he is called before that committee to testify. He was asked to testify on Thursday.

But Jeffrey Skilling, who is the former CEO of Enron, has to this point still told the committee that on Thursday he will testify. Who knows if that will change. A lot of people had, and a lot of insiders up in Capitol Hill, people that have been following this case, were actually surprised that Ken Lay was going to come out and testify without asking for immunity, come out and testify at a time when he is facing a dozen lawsuits, almost a dozen lawsuits, personal lawsuits, at a time when he is facing criminal prosecution from a very active Justice Department Task Force.

They were surprised that he would put himself in such legal jeopardy by coming before a committee without any promises of immunity, and talking to a committee knowing that his statements could fully be used against him in any of those civil cases, in any of those criminal cases.

WHITFIELD: All right, thanks very much Jonathan Karl for that update on that breaking story as it relates to the Enron investigation. Testimony was scheduled to begin tomorrow in Washington. First up, former CEO Ken Lay. He now says he will not be testifying tomorrow on Capitol Hill, and of course we'll have more on this information as it becomes available when we come back.

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